Shareholders of Flagship Investments Limited (ASX: FSI) would be aware of Flagship’s long-term performance record.
LIC Specialist Bell Potter released their 2020 report into LICs noting the Share Price performance of LICs within their research universe. Their tables identify that Flagship Investments outperformed all peer Large and Medium cap focussed LICs overtime periods 1 year, 3 years, and 5 years- validating the investment philosophy of the portfolio manager EC Pohl & Co and the skills of the investment team.
Flagship’s 3 Year and 5 Year returns of 17.9%pa and 15.7% pa are more than double the average return of peer Large, Medium, and Small-cap investing LICs.
|% return||6 months||1 Year||3 Years pa||5 Years pa|
|Flagship Investments Limited||33.3||28.9||17.9||15.7|
|Average – Large/ Medium||24.5||8.0||7.5||7.6|
|Average – Medium/ Small||34.0||16.7||3.4||7.0|
|Average – Small/ Micro||51.2||20.4||5.8||10.5|
|Average – Income||21.4||-4.9||4.7||-1.0|
|Average Domestic LIC||32.2||11.7||5.4||7.4|
Source: Bell Potter LIC Report February 24 2021.
UNDERSTANDING THE DRIVERS OF FLAGSHIP’S INVESTMENT PERFORMANCE
Flagship has delivered a strong performance to shareholders since it first listed in December of 2000. Bell Potter LIC/ ETF Specialist Hayden Nicholson recently interviewed Dr Manny Pohl AM to discuss the Company, its investment team, and the processes that have generated this consistent outperformance.
The interview can be viewed at the link below and for your convenience, we provide timestamps to the conversation:
- Origins of Flagships in the ‘90s, the conundrum for new fund managers and investment approach @ 0:00
- Investment Style and the value of forensic research in bottom-up stock picking (including the training of buy-sell vs sell-side researchers) @ 3:00
- Investment Process: top quartile performance over 20+ years @ 4:20
- How the FSI portfolio differs from ETFs, passive and also active managers @ 5:00
- Not building portfolios that generate low tracking error- delivering outperformance to investors instead @ 6:30
- Being in the index does not mean you are a good investment @ 7:15
- What we want from the management team of companies we invest in @ 7:45
- The importance of strong balance sheets when markets have a crisis: growing economic footprints @ 8:40
- Origins of the “Zero management fee”. Motivated to make money for investors @ 10:00
- Capital management in LICs and in FSI @ 12:20
- Building a stable a loyal register- having the right shareholders @ 15:30
- Never undertaking strategies that disadvantage your shareholders @ 16:00
- Role of Dividends. FSI approach to creation, payment & Special dividends @ 17:30
- 12m month market outlook: FSI focus is always on the stocks in the portfolio. Cash in economy + Replenished balanced sheets + technological acceleration @ 20:00
- FSI portfolio companies are strong- the real question is: What will the multiplier be, what are the P multiples? @ 24:00
- Risk-adjusted IRR avoids falling for value traps @ 25:00
- Two recent positions in the portfolio: Nuix and Serko @27:20
Access the full report by contacting the author: